Introductory honeymoon rate home loans

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Name		Interest Rate (p.a.)	Comp. Rate (p.a.)	Fees	Monthly Payment
Bank of Queensland 2 Year Intro Rate Variable Home Loan P&IHome≥ 10% Deposit	More Info	2.99%	3.22%	App: $0 Ongoing: $10 per month	$632.68	More Info	Get a low discounted rate for 2 years plus a 100% offset account. And you can get the loan with a 10% deposit.	Compare	loading Fetching your data...
Community First Honeymoon Home Loan P&IHome 1Y Fixed≥ 5% Deposit	More Info	2.44%	3.78%	App: $600 Ongoing: $0 p.a.	$589.12	More Info	A low fixed rate home loan for the first 12 months with no annual fee, no account keeping fee.	Compare	loading Fetching your data...
Bank of Queensland 2 Year Intro Rate Variable Home Loan P&IInvestment≥ 10% Deposit	More Info	3.24%	3.41%	App: $0 Ongoing: $10 per month	$653.06	More Info	Investors can get a low variable rate loan that's available with a 10% deposit. 100% offset account attached.	Compare	loading Fetching your data...

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If you're looking for a honeymoon home loan with an upfront discount you need to make sure that the loan is a good product for you (regardless of the discount) and check that it doesn't have big discharge or switching fees. This could make refinancing more expensive once the honeymoon rate ends.

What is an introductory home loan?

Introductory rate home loans are designed with first home buyers in mind. They offer a low rate of interest for a special promotional period (normally about a year), which helps keep your payments down. It’s not unusual for this low rate to be a whole percentage point below the standard rate.

Once the honeymoon rate period is over, the interest rate reverts to the product’s standard variable rate. If this revert rate is too high, you can consider refinancing to a cheaper home loan. This can take a little time and money, but will save you money in the long run.

Your lender may have another, similar loan product you could switch to instead of refinancing with a completely new lender.

Honeymoon home loan calculator

*Whilst every effort has been made to ensure the accuracy of this calculator, the results should only be used as an indication. They are neither a recommendation nor an eligibility test for any product and should not be construed as financial advice, investment advice or any other sort of advice.

Are honeymoon rates the best choice for you?

The most attractive feature of a honeymoon loan is of course its low introductory rate, but before you choose your new home loan, consider the different ways you can save interest in the first years of your mortgage.

Fees. Check the loan fees carefully. Most honeymoon rates are on variable home loan products. This means legally the lender cannot charge you a breaking fee. But if it's a fixed rate introductory discount then exiting the loan during this period can be costly because of fixed loan break costs.
Loan purpose. If you're an investor you need an investment loan. If you're a home owner then it's an owner occupier loan. Most honeymoon home loans are for owner occupiers only.
Features. Some loans allow you to make extra repayments and spend those extra repayments later via redraw if you need them. This can help you repay the loan faster and have extra cash when you need. An offset account does this but is even more flexible because the money is easier to access. Some introductory loans allow extra repayments but might be harder to find one with an offset account.

If you would like to see what effect additional repayments have on your mortgage, check our extra repayment calculator.

What should you do when the honeymoon rate ends?

Make note of your home loan's honeymoon period. It's usually only for one or two years. Your lender may notify you when the period ends, but they might not. Either way, check your home loan statement or log onto your lender's website and check the new rate your loan is now on. It's likely higher than the honeymoon rate.

Then you should do the following:

Compare rates. Check the latest home loan rates and see if your new rate is competitive or not. If not, you should consider switching (also called refinancing).
Find a new loan. Once you've compared rates find a new loan that suits your needs and has a more competitive rate.
Check switching costs. Once the honeymoon rate is over you will most likely be on a variable rate (even if it was fixed before). The loan may have have a discharge or switching fee of a few hundred dollars. The new loan may have some upfront fees too, such as an application fee.
Apply for the new loan. Organise your home loan application and hopefully you're successful. Your new lender will handle the change over and you just need to complete a discharge form with your old lender. And with that the honeymoon is over.

Thank you for your feedback!

Richard Whitten

Richard Whitten is a senior writer at Finder, and has been covering home loans and the property market in Australia for the last 4 years. He has written for Yahoo Finance, Money Magazine and Homely, as well as multiple banks and lenders. Richard has a Certificate IV in Finance and Mortgage Broking, a Bachelor of Education from the University of Sydney and a Graduate Certificate in Communication. He enjoys helping people understand the ins and outs of mortgages so they can make smarter property decisions. Richard trained as a high school teacher but found it easier to manage personal finances than a classroom full of kids. Before joining Finder, he edited textbooks and taught English in South Korea.

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